Gold prices gained nearly 1 percent on Monday after Greece’s
politicians sealed a deal to form a coalition government, while continued
uncertainty about resolving the zone’s debt crisis supported safe-haven demand
in bullion.
Greece’s politicians agreed on Sunday to form a unity
government to approve a eurozone bailout, but uncertainty over who will lead
the new Greek government amid bitter political divisions and the unspecified
timing of early elections remained.
Adding to this gloomy outlook were events in Italy, where Prime
Minister Silvio Berlusconi has one day left before a parliament vote on public
finance after his government failed to adopt reforms to defuse a dangerous debt
crisis.
“People are waiting for the situation to play out in Europe,”
said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
“Right now they are unwilling to put too many bets in
either equities or commodities.”
Poon said gold has been pushing higher by some fund buying, albeit
on a modest scale.
Spot gold rose to $1,769.79 an ounce, its highest since Sept
22, before easing to $1,768.50 by 0252 GMT, up 0.8 percent from the previous
close.
US gold GCcv1 also rose 0.8 percent, to $1,770.40.
Money managers, including hedge funds and other large speculators,
raised their bullish bets in gold futures and options in the week to Nov. 1 as
the price of bullion surged to its highest in five weeks, above $1,750 an
ounce, data on Friday showed.
Holdings of the SPDR Gold Trust , the world’s biggest gold-backed
exchange-traded fund, gained 1.513 tonnes on the day to 1,245.064 tonnes by
Nov. 4, highest in more than a month.
Gold prices have found good support on the downside from physical
demand with interest emerging from the festival season in India as well as
China, though volumes have slowed down, noted Barclays Capital.
“However, prices have struggled to gain traction as
they are caught between the need for liquidity, macro uncertainty and currency
movement,” it said in a research note.
Gold flow from Hong Kong to mainland China in
September jumped sixfold on the year to 56,896 kilograms, boosting the total
amount of gold flow in the first nine months to 201,068 kilograms, more than
double the quantity a year earlier, said Hong Kong Census and Statistics
Department.
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